A new report by the World Economic Forum claims retirees across the world will outlive their savings by years.
The report by the not-for-profit foundation warned retirees could outlive savings they built up by up to a decade or more due to higher life expectancy rates in the world.
“The size of the gap is such that it requires action,” said the report's co-author Han Yik, according to Bloomberg.
Unless something is done, people may have to postpone retirement for a few years or learn to spend less of their savings, Yik advised.
“You either spend less or you make more,” he added.
The report, which studied retirees in six major economies, found that 65-year-olds in the U.S. have enough saved up to cover 9.7 years of their retirement. Women, who have a higher life expectancy, have a 10.9-year gap. The report didn’t include Social Security or other government programs.
Meanwhile, in the United Kingdom, Australia, the Netherlands and Canada, the retirement savings gap for men is around 10 years. Women in those countries may have an extra two or three years before outliving their savings.
Japan has the largest savings gap — 15 years for men and nearly 20 years for women. Yik said many Japanese workers invest, which may help boost their savings. The average life expectancy for women in Japan is also the highest on Earth: 87.1 years.
“Despite these vast differences, the average retiree in Australia, Canada, Japan, the Netherlands, the United Kingdom, or the US will not be able to last through retirement on savings alone,” a news release from the World Economic Forum stated.
The World Economic Forum called on governments to do more and create retirement landscapes for its workers as well as roll back regulations to “allow individuals to make investments that will increase their long-term returns.” “With populations around the world living longer than ever before, we need far more creative decumulation solutions for longevity protection” Rich Nuzum, the president of wealth at Mercer, said in a statement. “There are some alternative solutions emerging such as pooled annuity funds, but older individuals are going to need a more diverse range of financial tools to help protect against longevity risk.”
The report noted the U.K. and the Netherlands were considering rolling back some regulations in regards to retirement savings.